Critics fault Hogan's plan to cut Medicaid spending

When Elissia Ellis gave birth to her second son this week, the entire pregnancy hardly cost her a penny.

Four ultrasounds, more than a dozen doctor visits, genetic screens and other tests — plus the delivery itself — were covered by Medicaid, the nearly free government health insurance program for low-income families. Maryland is among states that extend coverage to some pregnant women with higher incomes.

Ellis, a 27-year-old grocery cashier, has relied on the program at a time when Gov. Larry Hogan proposes to make fewer women eligible for it.

Hogan's plan to exclude approximately 1,400 pregnant women from the program next year is just one way the new Republican governor wants to rein in Medicaid spending. Medicaid is the single biggest driver of growth in the state budget — outpacing education and public safety. It's also the target of some of Hogan's biggest cuts.

"Our mission is to try to get a handle on the Medicaid thing," said David Brinkley, Hogan's budget secretary. "While this is a very admirable and important benefit, it's also expensive."

Gov. Martin O'Malley proposed some cutting of Medicaid — reducing the fees that are paid to physicians — as he made short-term budget reductions during his final weeks in office. But to many Democratic legislators, the expansion that allowed more women to qualify for Medicaid is a relatively small investment with extremely high returns. And they have made clear they will fight Hogan's plan to scale that back.

"There are some cuts that are not worth making," said an exasperated Sen. Roger Manno, a Montgomery County Democrat.

Brinkley and Hogan's staff said the governor proposed eliminating the free benefit for some pregnant women starting Jan.1 because it is redundant. With the Affordable Care Act, the women can instead buy affordable insurance on the health exchange, which wasn't an option in years past.

The administration proposes limiting prenatal Medicaid coverage to women who meet the federal standard, earning less than 185 percent of the poverty level. In Maryland, that is $37,167 for a family of three.

A decade ago, Maryland set the income threshold at 250 percent. That's $50,225 today for a family of three.

Legislative analysts say the change would save $9 million — half of that Maryland tax dollars, half federal — amounting to a small piece of the $210 million Hogan has proposed cutting from Maryland's Medicaid system next year. He has proposed continuing O'Malley's cuts to physician reimbursement rates, among other changes.

Extending care to more pregnant women has been popular among state lawmakers, who rejected a proposal last year from analysts to limit the program to save money.

Back in 2000, facing high infant mortality rates, particularly among African-Americans, Maryland lawmakers voted to allow pregnant women making up to 250 percent of the poverty level to qualify for Medicaid, increasing the threshold from 200 percent. The federal government pays half the cost of their care.

"Certainly access to care is the most important factor," said Dr. Bruce Gneshin, medical director of OB-GYN at Chase Brexton, a group of health centers that serve many low-income patients.

"The earlier we see patients, the earlier we can catch problems," Gneshin said. "Never mind that we're talking about lives, babies being damaged and babies being hurt. It's also expensive not to provide this care."

Gneshin said many of the Medicaid patients his practice sees come in with other health problems that complicate pregnancy, such as diabetes and high blood pressure.

Buying insurance instead — as people are required to do under the Affordable Care Act's mandate — would cost the women about $175 a month in premiums, plus co-pays.

Critics say there are other problems with relying on private insurance for these mothers-to-be. Not only is it more expensive for them, but a woman who is uninsured and becomes pregnant could not buy a policy unless she learned of the pregnancy during the annual three-month open enrollment period.

And because of a glitch in the federal law, women whose spouses are covered through their jobs do not qualify to buy a policy on the exchange — even if the spouse's coverage does not extend to her.

"You have to think of people who are living paycheck to paycheck," said Ellis, the new mother, who has an associate's degree in criminal justice and hopes to become a juvenile probation officer. "Even though it's $175, it's still expensive. ... If you pay that bill, you have to cut something else."

Hogan ran for governor on a promise to control state spending, and the day after taking office proposed a budget that slows the growth of spending in two areas that Democrats continued to fund at ever-increasing levels during the recession: education and Medicaid.

While Hogan's plan to limit education funding has so far drawn more attention in Annapolis, his cuts to Medicaid are larger — representing more than a quarter of the trims Hogan used to balance his proposed budget for next year.

Besides continuing O'Malley's cut to physician reimbursement rates, Hogan proposes to cut the Medicaid budget by eliminating about $2 million in grants given to some adult day care centers and ending the state's subsidy for a program that pays for family planning services. With the cuts, Maryland's Medicaid program would be given roughly the same amount as last year despite growing enrollment.

Advocates for Medicaid argue the cuts would reverse hard-won gains in granting access to health care for the state's poor.

The lion's share of cuts would reduce the rates paid to doctors. For years, Maryland struggled to convince enough physicians to treat Medicaid patients.

In 2001, Maryland doctors treating Medicaid patients earned just 36 cents for every dollar they received treating a patient on Medicare, the federal health insurance system for the elderly. The state government responded by pouring more money into Medicaid reimbursement rates: $50 million in July 2002, another $30 million in fiscal year 2006.

By 2014, Maryland doctors were being paid 87 cents for Medicaid patients for every $1 they were paid by Medicare. The federal government offered to pick up the tab for the higher rates, matching Medicare rates dollar for dollar.

But the federal funding ran out Jan. 1. O'Malley's budget for the current fiscal year called for paying the higher rates to physicians anyway, one of just 15 states in the country to do so. But when hit with his own budget troubles, O'Malley cut the rate back to 87 percent starting April 1. Hogan's new budget proposes keeping it there.

The Hogan administration says cuts to reimbursements could cause doctors to opt out of the program, but that the state just doesn't have enough money to make up for what the federal government stopped giving.

The state medical society contends that doctors dropping out of Medicaid could cause patients to go without care and lead to bigger hospital bills for the state later on.

A 2012 study found roughly 20 percent to 40 percent of the state's doctors would accept new Medicaid patients, putting Maryland in the middle nationally. Research suggests the higher reimbursements rates offered through the Affordable Care Act boosted those rates.

"We think it was a really bad mistake," Gene Ransom, CEO of the state medical society, said of O'Malley's initial decision to cut the rates.

Robinette Barmer, 59, joined the state's Medicaid rolls in May 2011, but the system was complex and confusing. So she didn't use it until a sharp pain in her right side sent her to an emergency room a year later.

Barmer, who is partially paralyzed, said it turned out she had liver problems that could have been treated by a primary care doctor if she had seen one. Once at the hospital — where her bills were covered by Medicaid — she was given a list of doctors who see Medicaid patients.

"I called six different doctors, and it took me about a month before I found one would take my Medicaid," Barmer said.

Baltimore County physician Willarda Edwards, a primary care internist, said she's been seeing Medicaid patients for three decades and struggles to convince more colleagues to join her.

"There's no telling with this new change how many people are going to say that they're not going to jump though Medicaid hoops anymore," Edwards said.

Administration budget cutters such as Brinkley say they are sympathetic, but the state has no choice but to control Medicaid costs.

"We're trying to ensure that we have the resources the state needs," he said.